it is called discounting. of course low rates are usually during bad times when asset prices are unsurprisingly not sky high. but ceteris paribus discounting and cash flow is the only thing that rules investing...
My old friend FCX hitting new 52 week lows this morning. Off 40% YTD while copper sits above $4.00/lb. Do you think maybe something is up with the metal (i.e. massive manipulation of the price in China)? Disclosure: having made all I need shorting this proxy for fake Chinese growth, I no longer have a position.
But do you really want to "park" your money in an asset like UST? All sorts of risks (duration, credit, etc) and what do you get? Not a whole lot more than cash...
Because it further exacerbates the issues that the banks are having... Effectively, IOER = 0 implies that there's a tax on excess reserves (due to the FDIC levy). If there's no adequate outlet for these excess reserves, which is what I believe, they will remain at the Fed and bleed the banks further. Furthermore, it's additional complications for the money-mkt funds, which are still funding a lot of the banking system. Disrupt that industry further (generally, a good thing to do, but maybe not right now) and who knows what you're gonna get.
you are right. i don't want to park it there. but we saw many times in the past few years that there will always be some "fools" who buys into "low" yielding treasuries (and make money)..
For sure... It's just a question of how much fear there is. All I'm saying is that until we know that US is like Japan it's hard to imagine a couple trillion of excess reserves going into USTs, no matter how much financial repression is used. Obv, I might be totally wrong on this.